Complete Financial plan for a 25-year-old working Indian urban youth.
Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
#threadbytradersushma
#financialplanning
#financialliteracy
Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
#threadbytradersushma
#financialplanning
#financialliteracy
1. EMERGENCY CORPUS
As soon as u starts earning, start planning to build for an emergency corpus. This may be in the range of your 6-12 months’ salary.
What to do?
Start a recurring deposit in your bank a/c for 20% of your salary.
As soon as u starts earning, start planning to build for an emergency corpus. This may be in the range of your 6-12 months’ salary.
What to do?
Start a recurring deposit in your bank a/c for 20% of your salary.
Eg. If your salary is Rs 25K pm, start an RD of Rs 5K pm for a period of 27 months. It will accumulate around Rs 1.5 lacs (6 months equivalent salary).
Once corpus is built deposit that money in bank FDs & do not touch it apart from emergencies. (Define your emergency needs).
Once corpus is built deposit that money in bank FDs & do not touch it apart from emergencies. (Define your emergency needs).
2. LIFE INSURANCE & HEALTH INSURANCE
Most of your employer might be providing these covers in form of group insurance policies but they never r sufficient. So, take additional covers both for life & health. Buying these policies will hardly cost u 10% of your salary.
Most of your employer might be providing these covers in form of group insurance policies but they never r sufficient. So, take additional covers both for life & health. Buying these policies will hardly cost u 10% of your salary.
Term insurance is one & only product which covers your life completely & provide the actual insurance to your family at loss of your life. Never ever go for insurance policies bundled with investment pdts.
Your term insurance should be at least 25 times your annual salary for cover up to 35 years. With increase in earnings this cover should increase proportionately. Diversify your term insurance policy across 2 best policy providers.
3. RETIREMENT PLANNING
Start with investing 10% of your salary in PPF A/C. It will take care of your long-term goals like retirement planning in addition to tax benefits under 80C. (under old tax regime)
Start with investing 10% of your salary in PPF A/C. It will take care of your long-term goals like retirement planning in addition to tax benefits under 80C. (under old tax regime)
Almost 40% of your salary is blocked by now for above needs. So, scope for investing is negligible. Wait for 3 more years to start your investing journey. 
4. REMAIN DEBT FREE
Do not avail any kind of loans for initial 3-5 years. Also try to pay off any existing/earlier loans u might have taken from bank/relatives in this period.
Do not avail any kind of loans for initial 3-5 years. Also try to pay off any existing/earlier loans u might have taken from bank/relatives in this period.
5. FRUGAL LIFESTYLE
Live frugal lifestyle & do not increase your expenses beyond your capacity. Fancy smartphones, watches & other gadgets can wait. Do not overspend.
Live frugal lifestyle & do not increase your expenses beyond your capacity. Fancy smartphones, watches & other gadgets can wait. Do not overspend.
6. INVESTMENT
Once your emergency corpus is built in 3 years, your 20% payment towards RD instalment becomes free. Now u can divert this money towards your investment goals.
Start an SIP in Index funds/ETFs for 20% of your salary income keeping a horizon of > 10 years.
Once your emergency corpus is built in 3 years, your 20% payment towards RD instalment becomes free. Now u can divert this money towards your investment goals.
Start an SIP in Index funds/ETFs for 20% of your salary income keeping a horizon of > 10 years.
7. INVEST IN YOURSELF
Even though your financial investment journey starts after 3 years, your personal investment journey can start right away. Start building skills. Read lots of books. Consume productive content on utube, twitter, podcast & other social media platforms.
Even though your financial investment journey starts after 3 years, your personal investment journey can start right away. Start building skills. Read lots of books. Consume productive content on utube, twitter, podcast & other social media platforms.
Some books to start with -
🔹Let’s talk Money by @monikahalan
🔹Rich Dad Poor Dad by @theRealKiyosaki
🔹Zerodha Varsity from @ZerodhaVarsity
🔹Safe strategies for Financial Freedom by Van K Tharp
🔹Let’s talk Money by @monikahalan
🔹Rich Dad Poor Dad by @theRealKiyosaki
🔹Zerodha Varsity from @ZerodhaVarsity
🔹Safe strategies for Financial Freedom by Van K Tharp
8. TAKE ONLY GOOD LOAN
Within 5 yrs of your job, your responsibilities must have increased – marriage, kids etc. Your income also must have increased.
So, by now u can think of availing good loans eg. Home loan, business loan etc.
Within 5 yrs of your job, your responsibilities must have increased – marriage, kids etc. Your income also must have increased.
So, by now u can think of availing good loans eg. Home loan, business loan etc.
Do not do the mistake of purchasing home at start of your job. It is a heavy one-time investment. So, avoid buying property in initial years of your job. Buy only when it cannot be delayed further.
Do not avail any other kind of consumption related loans like credit cards, personal loan, low-cost EMI purchases etc.
9. REAP THE BENEFITS OF SELF-INVESTMENT
Initial years which u have invested in yourself will start showing its benefits by now. U r financially educated & conversant enough to take care of your personal finance prudently. Your financial decisions will be taken wisely.
Initial years which u have invested in yourself will start showing its benefits by now. U r financially educated & conversant enough to take care of your personal finance prudently. Your financial decisions will be taken wisely.
U will be saved from these two worst habits which hinder the wealth creation goals -
overconsumption & underinvestment.
U might even start thinking of attaining financial freedom by trying for alternate sources of income.
overconsumption & underinvestment.
U might even start thinking of attaining financial freedom by trying for alternate sources of income.
That's a wrap!
If u liked my content please do like, retweet & follow me for more such informative finance related stuff.
Thank u!
If u liked my content please do like, retweet & follow me for more such informative finance related stuff.
Thank u!
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